We take dried mushrooms and grind them into a fine powder.
Then we will cook them multiple times with water and/or alcohol. Water to release water-soluble compounds. Alcohol to release non-water soluble compounds.
This cooking breaks down the cell walls of the mushroom allowing for the extraction of the beneficial compounds (beta-glucans, triterpenes, etc.). The mushroom cell walls are made up of chitin, which our bodies do not have the enzymes to break down properly so if we just eat fresh mushrooms the active compounds are not as bioavailable to us. Hence, the requirement for extraction.
The resulting liquid from cooking the mushrooms is drained off and concentrated to the desired consistency. If any alcohol is used in the extraction, it is precipitated out (removed).
The liquid is then sent to a spray dryer, which removes all the water, leaving you with the final powder.
So the final liquid is now a powder without any of the water and/or alcohol.